On March 21, 2023, the Minister of Finance, Mr. Éric Girard, tabled the provincial budget for the 2023-2024 fiscal year (Budget).

Here, we briefly discuss the new indirect tax measures announced in the Budget.

Increase in the specific duty on new tires for road vehicles

To ensure the sustainability of the Québec Integrated Used Tire Management Program and to eliminate the inequity between the cost of processing car and truck tires, the specific duty on new tires for road vehicles of CA$3 that was originally introduced on October 1, 1999, will be increased as follows:

• CA$4.50 for new tires for road vehicles, for which the diameter of the rim is less than or equal to 62.23 cm (24.5 inches) and the overall diameter is less than or equal to 83.82 cm (33 inches);
• CA$6.00 for new tires for road vehicles, for which the diameter of the rim is less than or equal to 62.23 cm (24.5 inches) and the overall diameter is greater than 83.82 cm (33 inches) but does not exceed 123.19 cm (48.5 inches).

The increased specific duty rates will apply as of July 1, 2023, to among other things, new tires of a road vehicle which a person acquires by retail sale in Québec, or brings into Québec for purposes other than resale or installation on a road vehicle intended for sale or long-term lease. It also applies regarding any new tires provided as equipment on a road vehicle which a person acquires in Québec by retail sale or by long-term lease.

Implementation of the new program for managing the tax exemption of First Nations regarding taxes

Under the federal Indian Act, R.S.C., 1985, c. I-5, the personal property of a person with Indian¹ status or a band that is situated on a reserve is exempt from taxation.

Due to technical considerations, the exemption cannot always be granted at the time of purchase, particularly with respect to certain goods subject to a specific tax, such as the tax on fuel and the tax on alcoholic beverages. In these cases, the purchaser must apply to Revenu Québec for a reimbursement.

Since July 1, 2011, a mechanism called the fuel tax exemption management program for persons with Indian status (FTEI) has made it possible to replace the reimbursement measure with a purchase exemption measure.

In order to facilitate the application of the tax exemption for certain other products covered by a specific tax, the Budget provides funding, over five years, for the implementation of a computer system under the new program for managing the tax exemption of First Nations from taxes (TEFNT).

This new program, which will be phased in as of July 1, 2023, will allow persons with Indian status to benefit from the exemption to which they are entitled, with respect to the tax on alcoholic beverages, at the time of a retail acquisition of alcoholic beverages for home consumption.

The TEFNT will also replace the FTEI, with the necessary adjustments, so that it also applies to the retail acquisition of fuel.

Click here to learn more.

For more information on this topic, please contact your Dentons Indirect Tax advisors Manon Jubinville, Camille Janvier-Langis and Dragann Mallette.

[1] The term Indian is used in this Dentons Indirect Tax Talks because it has a legal meaning in the Indian Act.